7-ELEVEN TO INTRO ‘PRIVATE LABEL’ BEER
New Brand Going After Corona
7-Eleven, the largest operator of c-stores in the country and one of the largest beer retailers period, is set to introduce a new private label beer brand called Santiago, Beer Business Daily has learned. The imported beer brand has the look and feel of Corona, although it will sell at a price advantage, according to generally reliable sources.
SABMILLER’S ASSETS. Santiago is brewed for 7-Eleven by El Salvadorian brewer Cerveceria La Constancia. Beer Business Daily can reveal that this brewery is owned by SABMiller through a consortium called Bevco Ltd. with a prominent El Salvadorian family.
If this particular brewery in El Salvador has excess capacity, what better way to fill it than to stuff 7-Eleven cold boxes across several states with your beer? Santiago could be shipped up the Pacific to San Diego or, alternatively, across Honduras and brought by ship up the Gulf to Houston or Corpus Christi fairly inexpensively.
THE BRAND. Santiago comes in a clear bottle with a simulated painted label. We have heard it is going for a $5.99 price point PTC for 4/6 NRs, rolling out in June. It will be distributed by Miller distribs in some markets, by 7-Eleven in others.
TWO CONCERNS. There are two concerns to distributors: 1. will the brand set a precedent to sneak outside of traditional beer distributorships for delivery to chains, and 2. will private label erode margins, taking share from established brands?
THE C-STORE WITH CLOUT. 7-Eleven has over 5,800 outlets and serves abut six million consumers every day. That’s a lot of foot traffic any way you look at it. Jim Keyes has been CEO for three years and has been aggressive in promoting the beer segment by pressuring brewers to come up with unique package sizes to fit price points. Santiago is the latest idea by Keyes to beef up his margins and sales of beer, an important category for c-stores.
CAN PRIVATE LABEL WORK? While most of the big grocery chains have their private label beer brands, they typically have been budget beers that cater to the lower end. They haven’t sold enough private label beer to get brewers worried, but it is a development that should be watched closely. Even with an imported private label brand with a price advantage such as Santiago , it’s tough to sell a brand that is not ubiquitous in the on-premise segment and in other retail accounts. Also, as we all know, heavy media advertising is what sells beer, and private labels are typically only supported with POS. However, if 7-Eleven elects to display the brand prominently and promote it heavily in their stores, it could prove to be a factor.
A COUP FOR MILLER? The big question is whether this arrangement is a quid pro quo for Miller, providing the brewer with some much-needed stroke with 7-Eleven. Or if it is merely a coincidence that SABMiller owns the brewery in El Salvador. Miller told Beer Business Daily that Santiago is not their brand, but 7-Eleven’s. Developing…
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